Patterson-UTI Energy(US:PTEN)2022-02-16 21:04Operations and Fleet - As of December 31, 2021, the company operated a fleet of 192 marketed land-based drilling rigs in the U.S. and Colombia, with 73 rigs in West Texas and 33 in Appalachia[34]. - The average active U.S. rig count increased to 106 in Q4 2021, up from 80 in Q3 2021, partly due to the acquisition of 13 active rigs from Pioneer Energy Services Corp.[23]. - The company ended Q4 2021 with 11 active pressure pumping spreads, with an expected average of 11 active spreads in Q1 2022[24]. - The company has invested approximately $409 million over the last three years to modify and upgrade its drilling fleet[37]. - Average rigs operating per day in the U.S. decreased from 149 in 2019 to 82 in 2021, with 1,662 wells drilled in 2021 compared to 2,690 in 2019[43]. - Pressure pumping equipment totaled approximately 1.1 million horsepower as of December 31, 2021, with 497 units in operation[48]. Financial Performance - The average oil price per barrel in Q4 2021 was $77.45, showing a recovery from the lows experienced in 2020[20]. - Capital expenditures for 2021 were approximately $166 million, with a forecast increase to $170 million for 2022 due to rising activity levels[25]. - The contract drilling backlog in the U.S. increased from approximately $301 million in 2020 to $325 million in 2021, with 22% expected to remain after 2022[59]. - Approximately 57% of consolidated operating revenues in 2021 came from the ten largest customers, with one customer accounting for approximately $216 million, or 16% of total revenues[58]. - The company recorded a $220 million charge in Q4 2021 related to the abandonment of 43 legacy, non-super-spec rigs due to limited commercial opportunity[43]. - A charge of $32.2 million was recorded in Q4 2021 for the abandonment of approximately 0.2 million horsepower within the pressure pumping fleet[49]. Acquisitions and Divestitures - The acquisition of Pioneer Energy Services was completed on October 1, 2021, valued at approximately $278 million, enhancing the company's contract drilling capabilities[27]. - The company sold its acquired well servicing rig business for $43 million in cash on December 31, 2021, presenting the results as a discontinued operation[30]. Technology and Innovation - The EcoCell™ lithium battery hybrid energy management system was commercialized to reduce fuel consumption and emissions on drilling rigs[64]. - The company continues to enhance technology offerings, including the Cortex® operating system for rig performance and the GenAssist™ application for fuel efficiency[45]. - The company abandoned certain directional drilling equipment totaling $2.5 million in Q4 2021 due to advances in technology rendering those assets obsolete[54]. Employee Relations and Safety - The company had approximately 5,000 full-time employees as of January 31, 2022, with employee relations considered satisfactory[66]. - The company trained over 3,500 employees on its Code of Business Conduct and Ethics in 2021[72]. - The company has implemented safety protocols in response to the COVID-19 pandemic, allowing many office-based employees to work from home[69]. - The company is committed to diversity and inclusion, requiring new supervisors and managers to attend training on these topics[71]. Regulatory and Environmental Considerations - The company is subject to numerous federal, state, and local regulations that could increase operational costs and affect business[75]. - The company faces potential legislative and regulatory changes regarding hydraulic fracturing that could impact operations and costs[83]. - The company monitors and assesses new policies related to greenhouse gas emissions and climate change, which may affect operations[89]. - The company does not anticipate significant capital expenditures for environmental control facilities in the foreseeable future[74]. Risk Management and Insurance - The company maintains liability and other forms of insurance to mitigate risks associated with its operations[91]. - The company has indemnification agreements with many customers, but these may be limited or unenforceable under certain circumstances[91]. - The company maintains various types of insurance coverage, including a $1.5 million deductible for workers' compensation and a $10 million deductible for general liability[92]. - The company self-insures several risks, including loss of earnings and most cybersecurity risks[92]. - The company retains the risk for any loss in excess of insurance policy limits or exclusions[93]. Financial Position and Borrowings - As of December 31, 2021, the applicable margin on LIBOR rate loans was 1.75% and on base rate loans was 0.75%[291]. - The company had no borrowings outstanding under its revolving credit facility as of December 31, 2021[291]. - Under the Reimbursement Agreement, the company is obligated to pay Scotiabank interest at LIBOR plus 2.25% per annum for any amounts not paid on demand[292]. - The company has exposure to interest rate market risk associated with borrowings under the Credit Agreement[290]. Seasonality and Market Conditions - Seasonality has not significantly affected the company's overall operations, although there is slower activity toward the end of the calendar year[95]. - The carrying values of cash and cash equivalents, trade receivables, and accounts payable approximate fair value due to their short-term maturity[293]. - The company utilizes numerous independent subcontractors and multiple suppliers for raw materials and services[96].